Business Excellence: How to activate your inner excellence – blog series 2 of 10

Mediocracy Instead of Excellence(For the German version of this post, click Link).

Then there are the spectacular crashes like Nokia, Kodak or General Motors. Most firms however get stuck in mediocracy. These firms do survive, but ultimately offer only weak returns, jobs without great career prospects and a customer service that leaves a lot to be desired. Often success depends on a charismatic entrepreneur, when he leaves then the company falls apart.

In fact only few companies achieve the leap to the desired top performance – to Business Excellence. This article investigates the fundamental reasons for these challenges and possible approaches to overcome these.

The points of departure for companies often are astounding comparable. While one company evolves and generates high growth and profits, languishes the other company and will be taken over in the best case. The difference should be pointed out with an example from real life.

From Top to Flop – a Real Life Example

A topical example concerns a furniture manufacturer which boasted nearly €300 million of sales. The most reputable Lean consultants implemented a brand new process flow production system with all the modern methods – top notch. Their designs captured prestigious awards. The quality management scored coveted certificates. Internationalization was pushed globally.

However, during the crisis strong distortions appeared and a comprehensive efficiency program was launched. Despite all, revenue tanked continuously. Then the thunderbolt: a loss of 15% of sales, which dealt the company a heavy blow. 

The executive management was fired at once. The company could be saved from immediate insolvency just due to massive business retreat, generous credit write-offs and a change of ownership. The mid-term future and the jobs are still uncertain.

In contrast to that a direct competitor, which –  starting out from a difficult situation –  pursued an excellence strategy. With an investment of more than €10 million in automatization and process integration this company outperformed its competition with higher customer attraction and better process mastery. A considerate and effective customer strategy won them gradually market shares. A few years down the road the initially dismissed underdog managed to surpass the former darling of the stock exchange and achieved market leadership. The future looks promising and further growth is pursued aggressively.

This real example demonstrates that the required methods and conditions are available to all competitors. But only the challenger has effectively exploited his chance and achieved with decisive measures the desired excellence.

Naturally, every success has many fathers and a profitable business performance is never guaranteed. Therefore a more profound investigation of the root causes for consistent, sustainable Business Excellence is much-needed.  

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> >  This blog post is number 2 of the blog series “Business Excellence: How to Activate Your Inner Excellence.”  To be continued….

For further information about the path to Business Excellence contact the author Andreas Sattlberger, Executive Advisor for Business Excellence at the firm procon in Vienna, Austria. You can reach him at sattlberger@procon.at

Getting Real: Baked-In Marketing

"Baked in: Creating Products and Businesses That Market Themselves" is a brand new book by the two US authors Alex Bogusky and John Winsor about marketing. This book provides a refreshing perspective on the purpose and the progress of marketing.
(Disclosure: I do have no business relationship with the authors or their firms; they have sent a free copy of their book for review to me.)

Actually, the authors are top ad guys in the U.S. with Crispin Porter + Bogusky. They know what they are talking about and they have made a convincing case why mass marketing is dead.

And, they show, what we can do instead. Because, it is time to put a stop on this kind of "marketing", where the CEO orders the marketing manager to try to sell some kind of product or service that nobody really wants.

Add-on Marketing Is Extinct
In fact, this "add-on" marketing - first to produce something and then to try to sell it - was never really marketing. However, the fact that this worked at all was temporarily possible due to an era when mass media reigned supreme.

Because, there was a time - our parents know it - when nearly all families viewed the same news, shows, soaps and, yep, advertising.

These times of mass media are long gone, but the advertising industry is still struggling about how to regain the power of the campaign: Spending millions and moving the masses .... It was just so simple and profitable. And it´s over. Face it.

The Single Most Powerful Marketing Tool
However, Bogusky and Winsor propose in their small, but essential book that today, marketing must be baked into the product and service.

Basically, they demand that we should use our creativity and integrate marketing, product design and advertising into one highly useful, value-loaded package of consumer delight.

The message of the book is clear: the product / service itself is the most powerful marketing tool. Yes, we all know that. However, why don´t marketers act on this knowledge?

In fact, the new product failure rate is up in the 90% range. At the same time we get dozens of similar offers every day. We are flooded with communication, ads and direct mail garbage shouting at us to buy a me-too version of some commodity.

Instead of pouring their hard earned money into really hot and useful products and designs, the marketing guys are trying to dupe us to buy the same-same once more. They call it "creating awareness", "brand preference" or "purchase intent"..... Shareholders call it: a waste of money.

Creativity Is the Key to Baked In
This is the key idea and premise of the book: Stop wasting money and start using your creativity of your people to deliver something consumers really want, love, take part in, co-create, embrace, recommend, enthuse about, adore, desire, etc., etc.

The biggest part of the book consists of 28 "recipes" on how to go for creating value and how to bake in marketing into the product itself.

Some recipes are really tasty, others we have cooked before (with Tom Peters, Blue Ocean Strategy, Market Busters, Lateral Marketing / Kotler, etc.), and others may turn out inedible (that´s okay, at least we tasted it).

Nevertheless, they provide a great many ideas with examples on how to make it better. From culture, through organization, to stories, to thinking habits, to attitudes, to processes and so on. Each recipe can bring some flavor to the process of creating a better product with baked in marketing.

One of the strengths of the book are the real world marketing and brand examples, which make the read easy and enjoyable, but also provides a tangible dimension to applied creativity.

Twitter @Bakedin #Recipe
There is a cool twist to the recipes. Because for each recipe the authors set up a twitter name that can be found on their blog www.bakedin.com where the cooking is going on in real time. This is user generated brewing & boiling of the finest cuisine, a la Web 2.0.

This crowd-sourcing allows every reader of the book to actually help to write forth a current and online version of the book. So if you do not like the taste of some recipes, just change it or make an entirely new one and post it on @Bakedin.

Does Baked In Work in the Real World?
When starting to "bake in" the marketing in our business, does the book help? Yes, definitely. The best way is to just test some recipes and you will cooking for a while on each of them.

When applying the recipies, I found the book makes a somewhat idiosyncratic journey in terms of the suggestions. For more structured minds, we would miss an organizing bracket that relates the various recipes to each other. Even if it would restrict the highly creative spirits.

We should not hold the authors´deep background in marketing and their strong creative streak against them, however, there are some non-marketing issues that are neglected. In fact, many of the suggestions aim to improve the processes of organizational learning and applied creativity.

These change management issues are tough challenges, especially for companies caught in functional fiefdoms and traditional structures.

Nevertheless, the book provides more than enough value for anyone seriously interested in winning the trust and the business of customers.

Baked In Applicable for European Marketers
Sometimes European marketers are sceptical towards the great enthusiasm of their US colleagues about such new trends. Therefore, the question of how the book is applicable for the European situation deserves an answer.

My answer to this is: even more; In many respects the Europeans need the lessons of this book even more badly. Because the attitude in Europe still too often is: "we know better" than the customers or a "we tell them what´s right" kind of elitist smartass arrogance.

The best cure to that kind of delusion is to jump right into the kitchen and - together with your colleagues, with real, tangible customers and with other creative spirits - "bake in" real marketing innovations in your products and services.

Leadership in Financial Reform - or Not

The global recession was caused by financial hubris and a nearly maniacal expansion of credit. Risk considerations were ignored and subdued until the risk exploded into all our faces.

Now, after having cleaned up the first mess, financial regulators try to appease us with timid reforms. One example is the white paper of the British governement: Darling rules out radical changes in City white paper. The US government is embarrassed by the humongous bonuses of the bank manages, while the economy and the unemployed suffer, here and here

Why kill the goose, that lays the golden eggs? But, were the eggs so golden and then for whom? And, who has to clean out the pen? In the end, financial managers found their personal profit perpetuum mobile: Leverage your equity until the hilt, if it explodes, turn the risks over to the governments and taxpayers. If it works out fine, pocket the cash and buy a big yacht.

These managers are all right and good people and fathers & mothers for the most part (besides outright fraudsters). It must be understood that their behaviour is not as much a question of values, but of reasons. Who on earth would give up risk-less money? The problem is not the individual, it is the regulations and incentives.

Why can´t we make the high-risk bankers eat their own losses? The answer is that it would destroy our economy. That is right. But why do we let our banks and financial institutions put us in such a situation? Because the central banking system provides the banks a shelter from free market forces. This is the crux of the problem.

The central bank is the "lender of last ressort" for banks and their money (credit). This creates a government sponsored monopoly. And as such, market forces break down and the situation we experience now is the sad result.

What would leadership mean in this situation? Financial regulators need to wake up to their responsibility towards not only the financial players, but to the society overall and institute a money system that does away with these artificial monopolies given to banks.

For the theoretical background on these see Rothbard. Practically, however, it is a sad state of affairs to know that our government budgets will wreck and bankrupt over the next years, while on the other hand completely reasonable changes are ignored.

It seems to me, here our political leadership is in the situation of the leading class of the U.S.S.R in mid-80´s. They know they got a problem, but reform is too hard. They would have to change the basis of their power structure, which they are unwilling to do.

As a result, our current leaders are leading us down a path that leads to more waste through government sponsered "deficit spending," which only means throwing good money (that we do not have) after bad money. Bailouts, subsidies and other nonsense destroys value on a scale not seen after the fall of Soviet-style communism.

It is ironic - if not foolish as well - to make new debts to cure the crash, which was caused by too much debt. In the end, the budget deficits will explode and suppress further growth for years to come (think: Japan).

Also, to call for less markets and more government, or even to ask leftist philosophers and other theoreticians to propose the establishment of a " better world" makes me feel scared. We do have fine market systems that made us successful, prosperous and even happy over the last 50 or 100 years. (Better than any other known to mankind.)

Now it is up to the enlightened leadership to preserve the working elements (e.g. markets) for all economic sectors: it is time now to let market rules work for the money and financial system.

5 Symptoms of Weak Leadership

When talking with senior managers about effective actions for improvement, these 5 symptoms regularly crop up:

1. Confusion about goals, roles & responsibilities
2. Insufficient or weak communications
3. No clear means to solve problems, make decisions and resolve conflicts
4. Leadership perceived as not leading and being out of touch
5. Lack of commitment to action

As one can see, these flaws are devastating for any organization. However, often they are denied like the "white elefant" in the living room and nothing is done to counter them. While the symptoms often are just signs for deeper problems, the first step is to acknowledge them.

As a resolution we often have started a formal change management inititative to counter the resistance to necessary and urgent transformations. Other reasons often are behind such situations and need to be identified and verified on basis of facts and data.

Whatever reasons cause such failings, in the end leadership is the major culprit and called upon to act!

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